Media: Chinese buyers cautiously re-engage with US propane as trade tensions eased

Signs of a tentative revival in US-China propane trade are beginning to surface, as Chinese petrochemical buyers cautiously re-engage with American supply amid easing trade tensions and narrowing price differentials.

Chinese propane dehydrogenation (PDH) plants have purchased at least four US cargoes so far in June—marking a notable increase from May, according to a Bloomberg report. Market participants view this as a potential turning point in a trade relationship that has been largely dormant since punitive tariffs derailed flows during the height of the US-China trade war.

Trade sources indicate that at least one Chinese PDH operator booked a July-delivery US cargo this week at a premium of around $8/ton to the Argus Far East Index. This marks a sharp drop from the recent premium highs of $22/ton, narrowing the cost gap that had previously favoured alternative origins.

The recalibration of US propane prices—now significantly more competitive versus Middle Eastern cargoes—has helped reignite Chinese interest. At one point during the 2024 procurement cycle, Middle Eastern propane was trading at over $100/ton above US volumes, inflicting heavy cost burdens on Chinese buyers already squeezed by margin pressures and overcapacity.

In 2024, China imported approximately 29.3 million tons of propane, with the US accounting for nearly 60%—a share that collapsed following the imposition of a 125% retaliatory tariff on American LPG imports. Chinese firms were subsequently forced to re-route supply chains, pivoting heavily to Middle Eastern sellers in a scramble to maintain feedstock flows to their PDH units.

The tentative trickle of US cargoes suggests the industry is reassessing its exposure. Still, traders caution that Chinese buyers are unlikely to fully pivot back to US supply until trade terms are cemented. “There’s movement, but no one is rushing in,” one East China-based trader noted. “The risks are too high until we see concrete changes on tariffs.”

For now, buyers appear to be adopting a hedged strategy—testing volumes while preserving flexibility in their sourcing portfolios. Should the US-China trade talks yield tangible outcomes, however, the stage could be set for a broader reconfiguration of LPG trade flows across the Pacific.

Until then, all eyes will remain on Beijing and Washington—not just for political signalling, but for the price signals that will follow.

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